Friday 29 Mar 2024
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KUALA LUMPUR (June 29): Petroliam Nasional Bhd (Petronas) has refuted allegations that its board of directors is at odds with Prime Minister Tan Sri Muhyiddin Yassin over the payment of sales tax to the Sarawak state.

In a statement, it said a report by Reuters dated June 26, 2020, titled “Malaysian energy giant’s board at odds with PM over payment to Sarawak state” is mere speculation, and had no basis.

“Petronas wishes to reiterate that in line with the joint statement issued on May 8, 2020, Petronas, in collaboration with its shareholder, is currently in the midst of negotiations with the Sarawak State Government to achieve appropriate commercial resolution.

“We remain committed to working closely with our Sarawak counterparts and our stakeholders to reach the best outcome on this matter. Our aim is to achieve a resolution that will lead to a more stable and conducive business and investment environment for the oil and gas industry, which will be especially important, given current market challenges,” it said.

Early last year, Sarawak imposed an additional 5% tax on all petroleum products in the state, effective January 2019. Petronas did not pay the tax, which led to the state filing a RM1.3 billion civil suit against the national oil firm.

At the time, Petronas was adamant that the sales tax was not valid, given that the matter appears under the Federal List and cannot be double-taxed. Petronas already pays tax to Putrajaya in the form of petroleum income tax.

This led Petronas to apply for a judicial review to declare the tax as null and void, although this application was dismissed by the Kuching High Court.

The company appealed against the decision, although it subsequently applied for a postponement to the appeal when proceedings were underway at the Court of Appeal on June 23, as Petronas indicated both parties intend to settle the dispute out of court.

Last week, Petronas counsel Datuk Seri Malik Imtiaz said the oil and gas group would be withdrawing the appeal by Aug 3, pending the finalisation of an agreement between Petronas and Sarawak, which was referred to in a joint statement by Petronas and Sarawak state on May 8.

The agreement stipulated that Sarawak acknowledged Petronas as the industry regulator in Malaysia, while Petronas agreed to pay the sales tax. Both parties also agreed that the tax would be lower and staggered, based on future negotiations.

Muhyiddin had previously hailed the resolution of the legal tussle between Petronas and the Sarawak state government, saying it would allow the state to be involved in the development of the oil and gas industry within its borders without impinging on Petronas’ role as the national oil company.

This resolution, he had said, was the right approach in terms of the long-term economic, financial and social interest of the nation. He had also said that a committee, chaired by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz and Senior Minister (Works) Datuk Seri Fadillah Yusof, would ensure that further talks would be carried out towards reaching a deal that is accepted by all parties involved.

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